August 2017 Market Update - What is an offset account and what is a redraw facility?

Play

If you are thinking about getting your first home loan, one of the first thing you will have to consider is what loan features you will want – if any.

Two of the more common loan features are offset accounts and redraw facilities.

If you have never had a home loan before, you may be wondering what is an offset account and what is a redraw facility.

Two very good questions.

In a nutshell, offset accounts and redraw facilities are two home loan features that use any extra income or savings to reduce the balance of your loan, in turn reducing your interest repayments - which can help you to save thousands of dollars over the life of your loan.

An offset account is a transactional account, which is linked to your home loan. The balance held in this account "offsets" the balance in the mortgage, helping you to reduce the interest paid and overall term of the loan.

A redraw facility on the other hand is a home loan feature that is attached to your mortgage that gives you the opportunity to make extra repayments to your home loan – which helps to reduce the interest repayments. You then have the option to “redraw” the extra funds you have paid into your mortgage if the need arises.

So now that you know what these home loan features are, you may want to know what the benefits of these home loan features are.

One of the main benefits of a redraw facility is the fact that it “forces” you to save.

Different lenders will have different rules when it comes to redraw facilities. Some lenders will limit you to as few as two redraws a year, while others may charge a fee per withdrawal or require that a certain ‘minimum’ amount be withdrawn every time.

While this doesn’t sound particularly flexible, it forces you to leave any extra funds you have pumped into your mortgage alone.

Meanwhile, with an offset account, it is very easy to deposit and withdraw money because it acts in the same way as an everyday transactional account.

Further, in an offset account, interest is calculated daily, so whether you save regularly or live paycheck to paycheck, as soon as there are some savings in your offset account for more than one day at any point in time, you will benefit from the offset effect on your home loan.

At Mortgage Choice, we can show you which home loan features might be best for your needs – if any at all.

So why not give us a call today on 13 77 62 to discuss your home loan options.

July 2017 Market Update - Buying your first property?

Play

Are you just about to buy your first property?

If the answer is yes, congratulations! Buying your first home is a truly wonderful experience.

And while buying your first property is deeply rewarding, there are some hidden costs that you need to be aware of.

To help you understand the true cost of buying a home, I am going to spend the next couple of minutes outlining some of the expenses you will face.

So let’s get started.

One of the biggest costs outside of a property’s purchase price is stamp duty. It is a state government tax that covers a range of transactional costs. The cost of stamp duty will vary depending on the price of your property and where you buy.

In addition to stamp duty, you will also have to pay a title registration fee. When you buy a property, you have to register the title with your state government. As part of this process, you will be charged a title registration fee, which is approximately $75.

If you are borrowing more than 80% of the total purchase price, you may have to pay lenders’ mortgage insurance, or LMI. This insures your lender (not you) in the event you default on your loan. The cost of Lenders Mortgage Insurance will vary based on the size of your loan, what your loan to value ratio is and your chosen lender. It is important not to confuse LMI with building insurance or mortgage protection.

You may also have to pay a loan establishment fee when you take out a home loan.

In addition, you will have to pay for your solicitor’s services as they are responsible for conducting all of the legal paperwork on your behalf.

Pest and building inspections will also need to be paid. These are usually conducted by qualified inspectors before exchanging contracts, at your expense.

Finally, there will be other, small expenses like removalist fees, new furniture, and packing materials to name but a few.

As you can see, there are a lot of expenses associated with buying property, so it good to have a financial buffer in place to help you foot the bills.

If you would like to know more about the home buying process and the costs associated, give Mortgage Choice a call today on 13 66 78.

June 2017 Market Update - Achieve your goals with refinancing

Play

Have you been thinking about renovating your home?

Perhaps you have been thinking about upgrading into a bigger property, or using the equity in your home to buy an investment property?

Maybe you have been in the same home loan for a while and are wondering whether there is a better, more competitively priced product on the market for your needs?

Whatever your situation, you may find that refinancing can help you achieve your goals.

By refinancing, you may be able to secure a sharper rate and thus lower your regular mortgage repayments. In addition, you may be able to consolidate some of your other debts into your mortgage or unlock equity and finally start those long-planned renovations.

But while there are many perks associated with refinancing, there is also a lot to consider before heading down this path.

The first thing you need to consider is the fees and charges associated with refinancing.

If you do plan to refinance, it is important to factor in all possible costs such as application fees, mortgage registration fees, Lenders Mortgage Insurance and even break costs. Break costs are often incurred when you try to break out of a fixed rate term early.
The second thing you need to consider when refinancing is your desired loan type and product facilities.

In other words, what do you want from your new home loan? Do you want the security of a fixed rate mortgage, or do you want the flexibility to make additional repayments?

How you answer these questions will ultimately help you to determine the type of loan product you want.

You also need to ask yourself what loan facilities you will need. Are you looking for a product with all the bells and whistles, or are you looking for a simpler product?

Finally, it is critical that you consider your loan term when refinancing. If you are already 10 years into a 30 year loan, you don’t want to refinance into another 30 year mortgage. Don’t make the mistake of signing up to another 30 years just because the interest rate on the new loan is smaller.

When refinancing the key is to know what you want, and do your research. The better informed you are, the more likely you will be to find a product that suits your financial situation.

At Mortgage Choice, we can answer all of your loan queries and help you refinance in to the right loan for you. So why not give us a call today on 13 66 78.

May 2017 Market Update - Top savings tips for First Home Buyers

Play

More than 30% of potential first home buyers have said they may have to put their property plans on the back-burner if interest rates rise, new research has revealed.

According to Mortgage Choice and Core Data’s Evolving Great Australian Dream whitepaper, 33.7% of prospective buyers said they would be “increasingly unlikely to buy a home” if rates started to climb.

The fact that a rate increase would encourage more than one in three first home buyers to put their property plans on the backburner is concerning.

The fact is, rates will rise in the future, so it is important for both home owners and potential home buyers to be prepared for this.

For many first home buyers, the hardest part about owning property isn’t managing the mortgage repayments, but saving the property deposit.

Thankfully, there are a few tricks all first home buyers can employ to help you reach your savings goal faster.

Firstly, you need to understand your finances.
Before you can set an achievable budget for yourself, you need to know what you are playing with. How much money are you earning and how much money are you spending each month?

When answering these questions, you need to be as truthful as possible. Don’t say you spend $100 a week on food, when you know you spend closer to $300.

Under-estimating your expenses will only put you further in debt..
Once your personal finances are mapped out, you need to allocate yourself a set amount each month to pay for food, transport, rent/mortgage, utilities, and any other outgoings you may have.

To ensure you stick to your weekly or monthly budget, it is worth trying to withdraw the exact amount of money you need at the beginning of each week.

If you can see exactly how much money you have to spend, you will be less inclined to spend your money on frivolous, unnecessary items.

Finally, where possible it is important to reduce or remove all unnecessary spending from your life.

Things like daily take-away coffees, or cafe lunches can really increase your spending. Similarly, pay tv, STAN or Netflix accounts that aren’t being used, should be shut down. While nice to have, these services can be a real drain on your resources.

If you would like to more savings tips, call Mortgage Choice today on 13 66 78.

April 2017 Market Update - How to clean up your bad credit history

Play

When it comes to applying for a home loan, your lender will review your credit history to see whether or not you have a good financial background.

If you don’t have a great credit past and instead have a financial history that is littered with late bill payments and defaults, you may find it tough negotiating with a lender for a home loan.

Thankfully, a bad credit history doesn’t have to destroy your dream of property ownership. There are three easy things you can do to clear up your financial history,

In the first instance you should make sure you pay down (or off) any credit card debt you have.

Carrying a high percentage of debt in relation to available credit drags down your credit rating, so it is important to focus on paying off the debt you owe on your credit card or cards.

The second thing you need to do is improve your payment habits.

Your payment history accounts for 35 percent of your credit rating, so it is essential to keep your payment history positive. Don't panic if you already have late or missed payments on your credit report. It's impossible to erase the past if this information is accurate, but your credit report only reflects seven years of credit history.

Making a commitment to pay on time now will boost your rating in the long term.

Finally, it pays to be cautious about new credit.

Too many loan applications in a short period of time can have a negative impact on credit history.

Opening many new accounts can also make it more difficult to manage your credit. Only apply for credit when it is absolutely necessary.

If you would like to know more about improving your credit history, call Mortgage Choice today on 13 66 78.

March 2017 Market Update - How to find your dream home

Play

With the hot days of summer now mostly behind us, now may be the perfect time to shop for your dream home.

Unfortunately, the right property doesn’t just fall into your lap. Finding your dream home can take patience, dedication, time and lots of energy.

Thankfully, there are a few easy steps you can follow to ensure you find your dream home within your budget and without exhausting yourself.

When shopping for your dream home, the first thing you should do is write a list of features that your desired property must have, including the number of bedrooms and bathrooms you require, whether you need a covered garage for your car, or perhaps a generous backyard for your dog.

Once you know exactly what you are looking for, you can narrow down the list of homes you wish to inspect.

Don’t waste your time visiting properties that do not meet most of your requirements.

The second thing you need to do is keep notes.

If you visit six different properties in the space of two hours, chances are the homes will blend into one by the end of the day. It helps to take photos of the different properties you visit, write notes on the features you loved and hated, and always take the brochures being offered by real estate agents.

Thirdly, it pays to develop good relationships with your local real estate agents. If you are on friendly terms with your local agents, you will increase your chances of being shown properties that not only meet your criteria, but fit within your budget. Your local agents may even be able to show you properties that are soon to be listed.

Fourthly, it is imperative that you work out the costs associated with buying a home and how much you can afford to spend on a property.

At Mortgage Choice, we can organise home loan pre-approval for you so that you know exactly how much you can borrow, and how much you can spend.

Finally, when buying a home it is critical that you stay within your budget. Don’t get caught up in the excitement of buying a home and ultimately and spend beyond your means – this will only lead to additional financial pressures down the line.

If you would like more information, call Mortgage Choice today on 13 66 78.

February 2017 Market Update - How to manage your finances better

Play

Did you make a resolution to eat well, get fit or manage your finances better at the beginning of the New Year?

If the answer is yes, you are not alone. A lot of us make resolutions at the start of a new year.

If your resolution was to save more or merely manage your financial situation better, then stay tuned.

There are a few easy steps that you can follow to ensure you turn that resolution into a reality.

The first step is to set yourself a goal that is both specific and realistic.

While it is ok to have a large goal in mind, such as buying a home, you should also set yourself smaller goals that will be easier to achieve.

Once set, it is important to review your goals at least once every six months to track how you’re doing.

The second thing you should do is create a budget.

By creating a budget, you will have full control of your finances and you will know how much you are spending and saving.

Tracking where your money is going also allows you to make clear decisions about your purchases and see what expenses you can potentially cut back on

The key is to not make your budget too complicated.

Your budget can be something as simple as a basic spreadsheet where you note down your income and all your expenses for the month.

The third step you need to take involves reviewing your finances.

Look at your current contracts – like gym memberships and or your phone contract and see if there are easy ways for you to reduce the amount you spend each month.

Another great way to reach your financial goal faster is to pay down your existing debt.

When you pay off non-tax deductible debts, like your credit card or personal loan, you free up your cash flow. This means you have more money in your back pocket each month to put towards your financial goals.

Finally, you should take the time to ensure you are partnering with the right lender for your needs. If your goal is to save more money faster, shop around and see which lenders are offering the highest interest rates on their savings accounts or term deposits.

If you would like more information, call Mortgage Choice today on 13 66 78.

January 2017 Market Update - Thinking about refinancing?

Play

The New Year is the perfect time for you to review your current financial situation.

Specifically, with interest rates hovering around record lows, now is the ideal time to make sure you are still in the right home loan for your needs.

By refinancing into a lower rate you can significantly reduce your monthly mortgage repayments and, in turn, free up some of your cash flow.

Of course, if you are thinking of refinancing your mortgage, there are some simple steps you should follow.

Firstly, it pays to do your research. Before you start down the refinancing path, it is a good idea to know exactly what home loan products and interest rates are available to you.

By knowing what else is available on the market, you can determine whether refinancing is the best option for your needs.

Once you have identified what products and rate are available, it might be wise to seek out professional help.

Your local mortgage broker can do all of the leg work for you and liaise with a number of lenders to negotiate you the best possible mortgage for your unique set of circumstances.

Finally, before refinancing it is critical for you to understand the costs associated with refinancing.

While there can be some fantastic benefits in refinancing your home loan, there are costs associated with the process, including break fees, loan application fees, valuation fees, settlement fees, stamp duty and, in some instances, Lenders Mortgage Insurance.

The costs associated with refinancing can be significant. As such, it is important for you to work out how much money you will save by refinancing and then identify whether it will outweigh the cost of doing so.

If you would like more refinancing tips, call Mortgage Choice today on 13 66 78.

For expert home loan advice, talk to us today.

All fields required

Contact us today:

Meet us in:

Have you used Mortgage Choice before? * :

YesNo

Additional Comments? * :

YesNo

Thanks for your enquiry. We'll match you up with your local Mortgage Choice broker who will get in touch with you soon!

Follow us for the latest news and tips on properties and home loans:

Talk to a Mortgage Choice expert

Established in 1992 by brothers Rod and Peter Higgins, Mortgage Choice was founded with the aim to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.

Since that time, we have grown and developed into a fully fledged financial services provider, and our founding principle remains very much at the heart of what we do.

Over 25 years of industry experience has taught us that you want advice you can trust and understand, from experts who have your best interests at heart. We now have the ability to deliver this across various financial products, including home loans, financial planning, car loans, personal loans, commercial loans, asset finance, deposit bonds, as well as risk and general insurance.

Disclaimer

The information provided on this website is for general education purposes only and is not intended to constitute specialist or personal advice. This website has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should consider the appropriateness of the advice to your own situation and needs before taking any action. It should not be relied upon for the purposes of entering into any legal or financial commitments. Specific investment advice should be obtained from a suitably qualified professional before adopting any investment strategy. If any financial product has been mentioned, you should obtain and read a copy of the relevant Product Disclosure Statement and consider the information contained within that Statement with regard to your personal circumstances, before making any decision about whether to acquire the product. You can obtain a copy of the PDS by emailing info@mortgagechoice.com.au or by calling 13 77 62.

#The comparison rate provided is based on a loan amount of $150,000 and a term of 25 years. WARNING: This Comparison Rate applies only to the example or examples given. Different amounts and terms will result in different Comparison Rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the Comparison Rate but may influence the cost of the loan.